2 CALIFORNIA LEGISLATORS THREATEN TO PENALIZE INSURERS WHO FLEE STATE

In the latest fallout from California's insurance rate-slashing Proposition 103, two state senators threatened Friday to press for multimillion-dollar penalties for insurers who flee the state.

Senate President Pro Tem David Roberti and Sen. Alan Robbins also summoned top executives of seven companies they said had stopped selling auto or business liability policies to explain themselves at a legislative hearing.Roberti said the hearing and threatened legislation were needed to show the industry the state intends to carry out voters' demands for insurance reform.

"If they're retaliating against the voters, we will retaliate against them," Roberti, a Democrat, said.

Proposition 103 would roll back rates on nearly all property and casualty insurance policies to 1987 rates and then cut premiums an additional 20 percent.

Industry spokesman Joe Annotti of the Independent Insurance Agents and Brokers of California said the senators' threat had little effect in the face of a state Supreme Court stay on imposition of the ballot measure.

Most of the many companies that indicated they might flee the state because of Proposition 103 suspended that decision after the high court issued its stay Thursday, he said.

State Attorney General John Van de Kamp will challenge the stay Monday, said spokesman Alan Ashby.

No matter how the legal battle turns out, a law forcing insurers to stay in business, incurring what they say will be monumental losses imposed by the proposition, won't work, said Annotti.

"You can't force companies to operate at a loss," he said.

Proposition 103, backed by consumer advocate Ralph Nader, was approved by a slim margin in Tuesday's election while four other insurance initiatives sponsored by the industry or by trial lawyers failed miserably.

Those results, together with the fact that Proposition 103 had an advertising budget minuscule by comparison to the other measures, amount to a voter mandate for reform, said Roberti and Robbins.

"The issue today is protecting the integrity of the ballot box," Robbins said, calling the insurers' response "petulant."